It's been a familiar refrain: In 2016, used-vehicle prices would drop because of the increased supply of off-lease vehicles.
But that hasn't happened.
In fact, the Manheim Used Vehicle Value Index in July rose for the fourth straight month to its highest level -- 127.0 -- since 127.5 in June 2011. In July 2015, it stood at 124.1. Black Book concluded that in July, used-vehicle prices were settling into "seasonal depreciation patterns." That's hardly setting off alarms.
So what's going on?
For starters, strong demand for used trucks caused their prices to surge, which offset lower used-car prices, especially in the subcompact and midsize segments, and buoyed overall values.
Favorable economic conditions and an industry that better understands how to buy, price and sell used vehicles also benefited used-vehicle prices this year, forecasters say. And the increased supply largely came in the form of 1- to 3-year-old off-lease vehicles in good condition, which have buoyed the average prices seen at auctions.
Their predictions may not have come true yet, but forecasters say their crystal balls still will be proved correct. They say used-vehicle depreciation will worsen in the second half of the year, driven by upticks in the supply of used vehicles and in new-car incentives.
KAR Auction Services Inc., parent company of auction giant ADESA, went into 2016 predicting that used-vehicle prices would drop 3 to 5 percent this year.